Innovations in Microfinance for Inclusive Growth

SHG-Bank Linkage Programme (SBLPs) has emerged as a significant instrument for financial inclusion for the excluded ones. Studies reveal that micro-credit to Self-Help Groups (SHGs) under SBLP has socially and economically empowered the SHG members. Proactive action from self-help promoting institutions (SHPIs), including the SRLMs, in ensuring quality of SHGs and financing agencies to credit-link more and more SHGs, especially in priority states and the North Eastern region, is the need of the hour. In the recent past, several initiatives have been taken with a view to intensify deepening of institutional credit penetration among SHGs. The documentation, Know Your Customer (KYC) requirements and processing fee norms are simplified for lending to SHGs. Credit flow to SHGs was accredited under lending to priority sector as well as to weaker sections. The bankers' interface with SHG clients needs to be made more effective to facilitate assessing financial needs of SHGs, ensure credit utilisation in the desired purposes, regular servicing of loans amongst others. A healthy banker-SHG interface will certainly improve the health of SHGs, making them sustainable and viable clients of banks. The Business Correspondents/Business Facilitator (BC/BF) network developed during past-decade also needs to be roped in to serve the SHGs effectively in cultivating thrift and credit dispensation.